Navigating the Transition: Delhi High Court’s Decision on Transfer of Winding Up Proceedings to NCLT under IBC   

Case Title: Uma Sharma v. Octagon Builders & Promoters & Anr. 

Date of Decision: 21st September 2023 

Case Number: CO.PET. 147/2014 & CO.APPLs. 858/2018, 301/2023, OLR 211/2019, OLR 293/2019 

Coram: Justice Prathiba M. Singh 




Uma Sharma (the petitioner) filed a petition under Section 433(e) and Section 439 of the Companies Act, 1956, seeking the winding up of Octagon Builders & Promoters (the respondent company). Multiple petitions were filed against the respondent company on the grounds that payments made to the company had not been returned. The court appointed an Official Liquidator (OL) for CO.PET. 147/2014 and disposed of the other petitions, allowing the petitioners to file claims before the OL. However, proceedings evolved as the company went into liquidation, and the Insolvency and Bankruptcy Code, 2016 (IBC) was enacted. 


Factual Background 


Several petitions were filed before the High Court against Octagon Builders & Promoters, alleging non-repayment of amounts paid to the company. The court appointed the OL for CO.PET. 147/2014 and disposed of the other petitions, granting the petitioners the right to file claims. Meanwhile, a petition was filed in the National Company Law Tribunal (NCLT), Allahabad Bench, related to the same company. The court considered the implications of the IBC and pending proceedings under Section 434 of the Companies Act, 1956.  


Legal Issues 


  1. Whether winding up proceedings under Section 434 of the Companies Act, 1956 should be transferred to the NCLT due to the enactment of the Insolvency and Bankruptcy Code, 2016? 
  2. How should the pending winding up petitions be dealt with, considering the objectives of IBC and the stage of proceedings?


Observation and Analysis 


The court considered the provisions of IBC and the Supreme Court’s guidance regarding the transfer of winding up proceedings. It noted that IBC aims to revive corporate debtors, and liquidation should be the last resort. The court reviewed Rule 5 of the Ministry of Corporate Affairs’ notification, which determined the transfer of winding up cases to NCLT. It emphasized that cases not at an advanced stage should be transferred.  


Decision of the Court 


The court recalled the order appointing the Liquidator for CO.PET. 147/2014 and transferred the petition to NCLT, Allahabad Bench. It allowed the claimants to pursue their claims before the NCLT. The court emphasized that transactions post-petition filing would be subject to NCLT proceedings and would not prejudice the claimants’ interests. The court also ordered the transmission of electronic records to the NCLT and allowed another claimant to implead in the case.  


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Written by – Ananya Chaudhary 

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